Nucor Corporation

Background

Nucor’s simple goals of investing in employees, deploying smaller-is-better manufacturing techniques and ensuring high profitability made it the second-largest steel manufacturer in the US, and led the company to Trinidad and Tobago to open a new direct reduced iron (DRI) facility in 2005.

The Company

Nucor bills itself as North America’s largest recycler, employing over 20,000 people who use both scrap iron and mined ore to fabricate iron and steel products. The Fortune 300 company does manufacturing differently, using electric furnaces in 200 ‘mini-mills’, controlled by 90 subsidiaries.

Nu-Iron Trinidad and Tobago, Point Lisas

  • Built with equipment shipped from Nucor’s decommissioned Convent, Louisiana plant
  • The US$300 investment paid off when the DRI plant pumped out more than 22o tons of iron per hour by only the second week of operations

The Challenge

Steel and iron manufacture is lucrative business, but it comes with expensive overhead costs. The manufacturing process uses intense temperatures, consuming large amounts of natural gas.

In 2004, Nucor bought American Iron Reduction’s Louisiana plant, a facility outfitted with modern, efficient technology.

But when the price of natural gas peaked at US$14.76 per thousand cubic feet in November 2005, not even the US state’s large pool of skilled labour and cluster of related services could stop the plant from losing money.

The Solution

Operations:
Before the US’ domestic shale gas boom, Trinidad and Tobago was the US’ largest natural gas supplier.

As an oil and gas economy, Trinidad’s energy costs are among the cheapest in the Western Hemisphere and help Nucor save on overhead costs:

  • Natural gas cost US$10.30 per thousand cubic feet in November 2005, more than four dollars lower than the US cost.
  • By September 2006, the Trinidad price fell to US$4.90, while the US price stood at over US$11, proving Trinidad’s energy cost savings over time.

And the country is constantly increasing its natural gas production.

  • 2000 – 493 billion cubic feet
  • 2005 – 1000 billion cubic feet
  • 2011 – 1443 billion cubic feet

Logistics:
Trinidad and Tobago is an ideal commercial platform for iron manufacturing. The country lies outside of the hurricane belt, a sheltered space from natural disaster disruptions.

It provides easy shipping access to North American, South American European and Asian markets, sitting especially close to Brazil, an iron ore mining giant and Nucor supplier.

Its Point Lisas port, where Nu-Iron is located, is within six miles of an Oldendorff iron ore transshipment hub, sending vessels to China and the Middle East.

The government’s enduring stability and business friendliness won Nucor over. General manager Jay Henderson said: “We have a very good relationship with the government, different ministries, and different government agencies.”

“They have been very helpful to us and that has helped to keep us here to continue to add capital to this facility.”

Trinidad’s educated and skilled technical workforce impressed the steel conglomerate. Nu-Iron’s 125 staff includes only three expats, two of whom are training local replacements. Staff is stable and willing to work hard, despite an intense 24-hour work schedule, helping to up production capacity from 1.4 million to 2 million tons a year.

Nucor is big on training, so the company works with the University of Trinidad and Tobago to attract undergrad interns and graduates into the manufacturing industry, building an even larger talent pool to fuel industry expansion.





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InvesTT Limited
Trinidad and Tobago
El Socorro, PoS
Trinidad and Tobago

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